Falling rates pound Asians setting off on summer trips


The growing fears of a no-deal Brexit after October 31 and the prospect of a general election being called by prime minister Boris Johnson have sent shockwaves around the currency markets (Photo: INDRANIL MUKHERJEE/AFP/Getty Images).
The growing fears of a no-deal Brexit after October 31 and the prospect of a general election being called by prime minister Boris Johnson have sent shockwaves around the currency markets (Photo: INDRANIL MUKHERJEE/AFP/Getty Images).

By Nadeem Badshah

HOLIDAYMAKERS going to India are facing a travel headache due to the falling value of the pound against the rupee.

Experts say the sterling has slumped this year and families are getting lower exchange rates on their travels to south Asian for summer trips and weddings.

The growing fears of a no-deal Brexit after October 31 and the prospect of a general election being called by prime minister Boris Johnson have sent shockwaves around the currency markets.

The pound is believed to be the worst-performing major currency in the past few months, resulting in pricier holidays – but is a welcome boost for Indian visitors to the UK.

In the first week of this month, the rate was around Rs 86 to £1.

Phil McHugh, chief treasury analyst at the Currencies Direct exchange firm, said the pound-to-rupee rate has plummeted over 10 per cent since March.

He told Eastern Eye: “Of course the twin risks of an increased likelihood of a no-deal Brexit outcome or the trigger of a general election have been the major drivers which have sent the pound tumbling against a range of currencies, including the rupee.

“That said, the Indian rupee is also gaining in its own right for two reasons. First, many developed central banks are turning dovish and looking at monetary easing in the months ahead, such as the Federal Reserve and the European Central Bank providing traction for the rupee and other emerging market currencies.

“In addition, the re-election of (India’s prime minister) Narendra Modi has pushed the rupee on a positive trajectory, further cementing gains.

“Although it is not all bad news, as the weaker pound provided a real opportunity for the nearly 80,000 tourists coming from India to the UK for holidays.”

The pound also fell against the euro and dollar at the end of July, crashing to a twoyear low at peak holiday time.

And the impact of higher prices is also being felt not only by families shopping for gold jewellery for weddings but also firms who import goods from India.

Jaffer Kapasi, from the East Midlands Chamber, told Eastern Eye: “There are predictions that the exchange rates will continue to fluctuate over the summer and through Brexit at the end of October.

“This means a disastrous impact on the British Indian community, especially those who have shoestring budgets while travelling to India for a wedding or for a holiday.

“Gold prices have increased with little faith in currencies. Some people have already postponed or cancelled their travel plans.”

Kapasi added: “The Indian economy will suffer as it has been very pro-active in promoting tourism, including health tourism.

“Many Indian vegetables are imported, so it will mean drastically increased prices.

“Businesses who import their raw material will suffer, [but] the exporters will benefit in the short run.

“Many commodities manufacturers in the UK rely on imports for their raw material, which again will have a chain impact.”

The chaos around Brexit continued on Monday (5) after health secretary Matt Hancock said he no longer believes parliament will be able to stop a no-deal Brexit amid rumours that Johnson is preparing for a snap election.

Hancock had previously said that “nodeal will not happen whether people want it or not” as MPs would block it.

But when asked on Monday whether he thought a no-deal exit could still be stopped, he said: “I now don’t think it can. When the facts change, even as a politician, you have to change your mind”.

Sana Ahmad,29, a finance worker in London, said the pound-to-rupee rate has affected wedding plans and charity donations.

She said: “People are holding off to buy their gold in India for the wedding season hoping the situation will improve.

“They are disappointed as they won’t get value for money as the rate is not as high any more. They are feeling a bit bummed.

“They are holding back spending, it has been the case for a while now.”

She added: “Muslims send zakat charity to the poor in India. However, people have been waiting so their donation goes further.”